Learning Outcomes
LO1: What is a lean startup? And what is this changing?
LO2: Recognizing that our ideas are only hypotheses until we have tested them
LO3: How do we test our hypotheses?
Learn Startup Methodology
“Startup success can be engineered by following the process, which means it can be learned, which means it can be taught.” – Eric Ries
Many consider Steve Blank as the father of the lean startup movement. An entrepreneur in Silicon Valley, and an adjunct professor at Stanford, he came up with the customer development methodology, that focused on the importance of talking to customers in order to start a venture.
“Customer development is a formal methodology for building startups and new corporate ventures. It is one of the three parts that make up a Lean Startup (Business Model Design, Customer Development, Agile Engineering).
The process assumes that early ventures have untested hypotheses about their business model (who are the customers, what features they want, what channel to use, revenue strategy/pricing tactics, how to get/keep/grow customers, strategic activities needed to deliver the product, internal resources needed, partners needed and costs.). Customer development starts with the key idea that there are no facts inside your building so get outside to test them. The hypotheses testing emulates the scientific method – pose a business model hypothesis, design an experiment, get out of the building and test it. Take the data and derive some insight to either 1) Validate the hypothesis, 2) Invalidate the Hypothesis or 3) Modify the hypothesis.”[1][2]
(retrieved on Feb 6, 2018 from https://en.wikipedia.org/wiki/Customer_development)
The reputation of the Lean Startup methodology is, however, due in part to the success of Eric Ries, a student of Steve Blank who published the book, The Lean Startup, in September 2011. [Please read the book if you are inspired]
Eric Ries put forth the concept of a minimum viable product (MVP) a “version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort” (similar to a pilot experiment). The goal of an MVP is to test fundamental business hypotheses (or leap-of-faith assumptions) and to help entrepreneurs begin the learning process as quickly as possible. As an example, Ries notes that Zappos founder Nick Swinmurn wanted to test the hypothesis that customers were ready and willing to buy shoes online. Instead of building a website and a large database of footwear, Swinmurn approached local shoe stores, took pictures of their inventory, posted the pictures online, bought the shoes from the stores at full price after he’d made a sale, and then shipped them directly to customers. Swinmurn deduced that customer demand was present, and Zappos would eventually grow into a billion dollar business based on the model of selling shoes online.” [Retrieved on Feb 6, 2018 from Wikipedia https://en.wikipedia.org/wiki/Eric_Ries]
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